Since last couple of years construction chemicals sector in general and waterproofing business in particular has become new battle ground for the organised manufacturers. After the introduction of GST, unorganised sector, which accounts for substantial portion of the market, is losing its edge and the players in the organised sector are making all out efforts to grab this market share. Though Covid-19 has put a break on the surge of the industry, its bounce back was quick and astonishing. While fight is going on to grab the unorganised sector’s market share, within the organised sector too battle lines are drawn to claim/maintain the leadership position.
Pidilite is the market leader
In India, the waterproofing market is led by Pidilite Industries who is estimated to have around 50% market share. However, paint companies have made significant inroads into this market. Asian Paints has around 20-25% market share in the water proofing market and has been gaining share consistently. Initially Asian Paints was present mainly in remedial waterproofing. However, in the past couple of years, Asian Paints is also pushing strongly in the new construction waterproofing segment.
Competition is helping market expansion
Pidilite, the market leader in waterproofing business, is not much disturbed by the competition in the market. “The paint companies have been in construction chemicals now for over 5 to 10 years. So, it is not new competition, we are used to this competition,” says Bharat Puri, MD, Pidilite Industries Ltd. He also feels that competition is also helping the sector expand faster. “Waterproofing as a category has at best about 40% penetration, which means 4 out of 10 new homes that are built actually do proper waterproofing. Hopefully, with the entrance of new players, etc., if this 4 becomes 6, we gain. We are clear that our leadership position has to be maintained by a strong brand, great innovation and then great sales and distribution.” Waterproofing remains one of the fastest-growing categories for Pidilite and the company claims that it is not losing the market share despite the gains made by the competitors.
Pidilite aims to grow its construction chemicals business 2 to 5 times the GDP growth rate. But the company won’t be sacrificing much on pricing front to achieve its growth targets. “We would like to grow it 2 to 5 times of GDP, obviously, from both marketing, sales and distribution, a people perspective, it is an investment business,” says Puri. Even if the margin is slightly lower it will be compensated by growth in the industry over a period of time.
Asian Paints focuses on product launches
Asian Paints, one of the first paint manufacturers to enter waterproofing business is satisfied with the performance of the segment so far. The company has gained market share in this segment despite the difficult times and growth opportunities offered by the waterproofing business has encouraged the company to introduce new products. According to Amit Syngle, MD & CEO, Asian Paints, last year the company launched 25 new products in the segment and in the first quarter in the current financial year too the company has introduced many new products. According to Syngle success here largely depends upon “the ingenuity of your product in terms of the solutions which you are able to offer.”
According to Srijit Dasgupta, Director (Finance) & CFO, Berger Paints, waterproofing is one of the fastest growing segments within the overall construction chemical. After taking over STP, the company has been able to fill in the gaps in its product portfolio. “All the gaps have been filled so good potential for our waterproofing products as well as admixture category in our overall construction portfolio.”
Asian Paints wants to be a solution provider
Asian Paints is positioning itself as a solution provider than a product seller. Also, the company, as a part of its marketing strategy, offering contractors to improve their skillsets in waterproofing. Further, based on that training and the product, the company is offering certain warranties in the market.
Syngle feels though there is no entry barrier in the market it’s very difficult for a newcomer to come start selling his products and replace others. “We have worked very, very hard in this category one, in terms of getting the ingenuity in our products.”
Almost all the players in the industry are now convinced about the long term growth prospects of the industry. According to industry people not only retail sales but also project sales are picking up. “We are also quite optimistic about real estate now reviving because, as you know, real estate has suffered not only during COVID, but even before COVID. There is no doubt about the fact that when we speak to a lot of our key customers, they have seen a lot of inventory liquidation of their existing projects. All of us know that there is a massive housing stock shortage, both at the affordable and the upper middle-class level in India.” So good times are ahead for the waterproofing manufacturers. But remember, the number of players to share the booty too is increasing.